Olam International: The Green Knight
A benchmark for sustainable agri-business practices in Sub Saharan Africa
As climate change- experts in developed countries race against time to stem the global assault on weather patterns and farming, less developed countries who lack strong public institutions actively supporting the cause are being left behind. However, forward-looking private organizations who operating in these countries and understand the critical impact of climate change on the future of their business, have begun to act and join the global movement to cut emissions. One such corporation, is Olam International, one of the world’s largest agri-business with agriculture, processing and distribution, who has acknowledged the adverse impact of changing weather patterns on crop yields across the emerging countries in Africa and beyond [1], and introduced various targeting sustainability schemes to reduce emissions within its direct operations and in its supply chain with external farmers and logistics providers.
Olam international, was established in 1989 with 1 product in 1 country, trading cashew from Nigeria into India, and has now grown into a global agri-business operating from seed to shelf in 70 countries, supplying food and industrial raw materials to over 16,200 customers worldwide [2]. The company directly procures from over 4 million small farmers in emerging markets, and now attests to lower food production yields from these farmers due to changing weather patterns. This presents a very real danger to Olam’s ability to continue to supply crops in the quantities required to its consumers across the world. According to the Food and Agriculture Organization of the United Nations (FAO), “emissions from agriculture, forestry and fisheries have nearly doubled over the past fifty years and could increase an additional 30 percent by 2050, without greater efforts to reduce them.” One particular area of increased source of emissions noted by the FAO is the application of synthetic fertilizers, which accounted for 13 percent of agricultural emissions (725 Mt CO2 eq.) in 2011, and were the fastest growing emissions source in agriculture, having increased some 37 percent from 2001 to 2011. [3]
Recognizing the impact of Climate change, in 2010, after “3 years of development and engagement with communities, our farm extension staff, customers, NGOs and other experts”, Olam launched the Olam Livelihood Charter (OLC) with aimed at addressing core issues around sustainability practices along its supply chain [3]. Per the OLC, one of the core eight principles was Environmental Impact, which was aimed at “reducing overall environmental footprint by training farmers on Climate-Smart Agricultural practices to increase productivity, improve soil, water and forest management” [4].
Since its launch, the OLC initiative has taken a few concrete steps to achieve its objectives, including
- Improving the intensity of GHG emissions from the company’s own farming and processing operations: Under this initiative, OLAM started reporting its carbon footprint and set reduction targets across its direct farming and processing operations. As a first step towards reducing GHG emissions on its Palm plantations, the Company implemented GHG calculators to help identify GHG hotspots over the lifecycle of crop yields. In its cashew factories in Nigeria and Cote d’Ivoire, a portion of energy generation is now derived from Biomass, and has qualified for carbon credits claims under the United Nations Clean Development Mechanism (CDM) in 2012
- Encouraging Olam’s farmer suppliers and logistics providers to improve their GHG emissions intensity and build in climate resilience: Olam identified related efforts here as a critical area of focus particularly because the farmers and suppliers in the company’s supply chain are the major source of emissions associated with its business. The four major practices included rice cultivation, land use, fertilizer application and ocean logistics. Olam developed various sustainability programs targeting each of these specific practices and has actively engaged and educated its farmers and logistics providers in working towards specific targets under each initiative. For example, Olam trains its farmer suppliers on Good Agricultural Practice, such as minimum tillage and efficient fertilizer use. The Company also actively works to minimize its sea freight carbon footprint by using fuel efficient ships where practical.
Going forward, Olam continues to build on its strong sustainability practice and has set an inspiring precedent for other corporations, agri-business or otherwise, operating in Sub Saharan Africa.
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References
[1] Climate Change:Adapting to risks and opportunities for Olam and communities http://olamgroup.com/sustainability/focus-areas/climate-change-2/ accessed on Nov 10, 2016
[2] In a Nutshell. Olam international, http://olamgroup.com/about-us/in-a-nutshell/ accessed on Nov 11, 2016
[3] “Agriculture’s greenhouse gas emissions on the rise”, accessed at http://www.fao.org/news/story/en/item/216137/icode/ on Nov 11, 2016
[4] Olam Livelihood Charter.http://olamgroup.com/sustainability/olam-livelihood-charter/ accessed on Nov 10, 2016
Thanks for sharing Ozi! It’s great to know that big players like Olam are stepping up to take more active role in preventing global warming. In places where government enforcement is weak and agricultural practices are outdated like Africa, Olam will play a critical role to drive awareness and changes going forward. My question here is how Olam keeps their suppliers and farmers accountable, what kind of incentives they are providing to farmers and suppliers and how Olam ensures traceability of their products. Accountability will be a key success factor for this program since it will provide the strongest incentive and feedback mechanism for farmers and suppliers to change.